The Standard and Poor's 500 Index (S&P 500) is a record of 500 of the biggest U.S. organizations, recorded on the New York Stock Exchange or NASDAQ, chosen by the Standard and Poor's Index Committee dependent on market capitalization. The S&P 500 Index is a generally perceived gauge of the U.S. Equity market value. S&P 500 Index reserves enable financial specialists to set up a center distribution in huge top U.S. Equitys.
The S&P 500 Index subsidies try to duplicate the execution of the benchmark record by putting filling resources from S&P 500 constituents with comparative loads. These assets utilize a detached or ordering venture procedure and contribute all or a significant measure of their absolute net resources in like manner stocks incorporated into the benchmark list.
1. Vanguard 500 Index Fund Investor Shares
The Vanguard 500 Index Fund Investor Shares seeks to provide investment results corresponding to the price and yield performance of the S&P 500 Index, its benchmark index, with a high degree of positive correlation. VFINX was issued by Vanguard on Aug. 31, 1976. The fund has generated a 13.87% total return over a three-year period. VFINX is managed by the Vanguard Equity Investment Group and charges an annual expense ratio of 0.14%, which is significantly lower than the average expense ratio of mutual funds with similar holdings.
The investment policy:
The VFINX implements an indexing strategy and invests nearly all of its total assets in stocks included in the S&P 500 Index, with approximately the same proportions as the weightings in the index.
The Vanguard 500 Index Fund has total net assets of $434.47 billion. Its trailing 12-month yield was 1.8%. The fund's beta (three-year monthly) was 1.00.
The fund has a three-year Sharpe ratio of 1.11; and standard deviation in line with that of the underlying benchmark at of 11.18%.
The VFINX is best suited for long-term investors with a moderate to high degree of risk tolerance seeking exposure to the U.S. large-cap equities market. Since VFINX has a minuscule tracking error and a low expense ratio, it is an attractive core holding for an equity portfolio.
2. Schwab S&P 500 Index Fund
The Schwab S&P 500 Index Fund was issued on May 19, 1997, by The Charles Schwab Corporation. SWPPX is advised and managed by Charles Schwab Investment Management, Inc., and charges an expense ratio of 0.02%.
The Investment policy:
SWPPX is a mutual fund that seeks to provide investment results corresponding to the total return of the S&P 500 Index. To achieve its investment goal, SWPPX typically invests at least 80% of its total net assets in stocks comprising the S&P 500 Index. Additionally, SWPPX generally gives the same weights to these stocks as the index.
The SWPPX has $34.91 billion under management and a portfolio turnover of 2%. SWPPX had a beta of 1.0; an alpha of -0.07; a Sharpe ratio of 1.12; and a standard deviation of 11.16.
This fund is suited for the long-term investor and has truly been a big gainer for those that got in following the 2008/2009 crash when this stock was only $10 a share.
3. Fidelity 500 Index Fund
Issued on Feb. 17, 1988, by Fidelity, the Fidelity 500 Index Fund provides low-cost exposure to the U.S. large-cap equities market. FXAIX charges an annual net expense ratio of 0.02%. Since its inception, the fund has generated 14.98% in annual average returns.
To track the underlying index, FXAIX invests at least 80%, under normal market conditions, of its total net assets in common stocks comprising the index. FXAIX has historically tracked the index with a small degree of tracking error.
FXAIX serves as an alternative to VFINX and SWPPX and is one of the top funds that offers exposure to a basket of common stocks included in the S&P 500 Index. FXAIX may serve as a core holding in a portfolio of U.S. equities.
4. T. Rowe Price Equity Index 500 Fund
The T. Rowe Price Equity Index 500 Fund (PREIX) was launched on March 30, 1990 and has since delivered a five-year average annual return of 10.7%. The PREIX charges a net expense ratio of 0.23%.
The investment policy:
Tracking the S&P 500, the fund aims to match the investment return of large-capitalization U.S. stocks by seeking to match the performance of its benchmark index. Based on trailing 10-year statistics, PREIX has a Sharpe ratio of 1.06 and a standard deviation, or volatility, of 13.43%. The PREIX has total net assets of $25.55 billion.
This fund is primarily for investors that are seeking to gain exposure to U.S. large-cap equities market and are willing to exchange the slightly higher expenses for some serious upside as this fund has gained more than doubled since the market crash of 2008/2009.
Investing in Index Funds
Investing in Index Funds can be a great durable investment and also a great way to easily diversify a portfolio. While the stock market has its highs and lows, the long-term trend for the S&P 500 index is overwhelmingly positive. This gives an opportunity for a low-risk investment opportunity.